Identify the effect of tax incentives for saving on aggregate supply using the model of the macroeconomy. In the graph, the horizontal axis is labeled Output (real GDP per period) and the vertical axis is labeled Price Level (average price per unit of output). The graph shows a slope labeled AD from top left to bottom right and a rising curve labeled A S from bottom left to top right. A D and A S intersect each other. The results are that a. the equilibrium rate of output increases Correct. b. the equilibrium price level decreases Correct.

Identify the effect of tax incentives for saving on aggregate supply using the model of the macroeconomy. In the graph, the horizontal axis is labeled Output (real GDP per period) and the vertical axis is labeled Price Level (average price per unit of output). The graph shows a slope labeled AD from top left to bottom right and a rising curve labeled A S from bottom left to top right. A D and A S intersect each other. The results are that a. the equilibrium rate of output increases Correct. b. the equilibrium price level decreases Correct.

Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781305971509

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter8: Application: The Costs Of Taxation

Section: Chapter Questions

Problem 3CQQ

See similar textbooks

Similar questions

Which of the following is NOT a tool of fiscal policy. O taxes O government spending Onterest rates none of the above Question 2 Assume the economy is in a deep recession. The appropriate fiscal policy response would be to: raise taxes and raise govemment expenditures cut taxes and cut govermment expenditures raise taxes and cut government expenditures O cut taxes and increase government expenditures D Question 3 Crowding out refers to the fact that: Tax cuts will cause inflation O Tax cuts may result in higher interest rates which will "crowd out" business investment spending O increased government spending will crowd out spending on imports none of the above
Imagine that a group of advisors to the president has suggested providing a tax cut for the middle class in order to stimulate the economy and reduce unemployment. The president has asked for your analysis of this proposed tax cut. Post your thoughts both as an economic scientist and economic policy advisor. Read the scenario and, respond to the following: Describe how an economic scientist would approach the tax cut recommended by the advisors in the scenario you just read. What are some economic factors that the economic scientist would consider when crafting his or her statement on the tax cut proposed? Describe how an economic policy advisor would approach the same tax cut and provide the reasoning behind the position. Remember to think like an economist scientist and economic policy advisor when you write your post, even if it goes against your own opinions about whether a tax cut is a good idea. To guide your responses, consider the following questions: What economic…
Identify the effect of increase in tax rates on either demand or supply curve and the equilibruim interst rates.
Analyze the graph below, showing the Gross Federal Debt as a percentage of GDP for the United States (1939-2019). Which of the following is correct? FRED d- Gre ederal Dea Percentof Gr Done Produd 116 2013 Pa S Sor O e Loa fe In 2019, the Federal Government of the United States had an accumulated debt/GDP higher than 100 %, meaning that the amount of debt accumulated over time is higher than the value of all goods and services produced in that year. The debt/GDP is always positive during this period, so the Federal Government of the United States incurred in budget deficits every year since 1939. From the mid-40s until the mid-70s, the debt/DGP was decreasing, meaning that the Federal Government. of the United States was running a budget surplus every year during those three decades. During the second half of the 1970s, the Federal Government of the United States was able to keep a balanced budget and, as a result, the debt/GDP was close to zero.
Economist Arthur Laffer famously pointed out that, in some cases, income tax revenue can actually go up when tax rates go down. Why might this be the case?
What are some of the ways fiscal policy might encourage economic growth?
Using the graph, shit the aggregate demand curve to depict the impact that a tax hike has on the economy. PRICE LEVEL 120 110 C 100 R 30 OUTPUT Aggregate Demand 50 10 Aggregate Demand Suppose the governments of two very similar economies, economy N and economy M, implement a permanent tax out of equal size. The marginal propensity to consume (MPC) in economy N is 0.85 and the MPC in economy M is 0.8. The economies are otherwise completely identical The tax cut will have a larger impact on aggregate demand in the economy with the
If the government got rid of sales tax, how might this affect the market? shift AD to the right shift SRAS to the right shift AD to the left shift SRAS to the left
The graph below shows the Laffer Curve, Using the point drawing tool, identify a tax rate/tax revenue combination such that tax rates can be reduced without reducing tax revenues. Label your new point 'T,' Carefully follow the instructions above, and only draw the required object. Tax Rate Tax Revenues
Figure 8-23. The figure represents the relationship between the size of a tax and the tax revenue raised by that tax. 6 on4m21 3 Tax Revenue B Tax Size Refer to Figure 8-23. If the economy is at point A on the curve, then a small increase in the tax rate will O increase the deadweight loss of the tax and increase tax revenue. O increase the deadweight loss of the tax and decrease tax revenue. decrease the deadweight loss of the tax and increase tax revenue. O decrease the deadweight loss of the tax and decrease tax revenue.
What is the difference between indirect taxes and net indirect taxes? Macro economics
The Federal Budget- Ask FRED The accompanying graph contains data on "U.S Individual Income Tax: Tax Rates for Regular Tax: Highest Bracket'" reproduced in the accompanying graph to analyze this aspect of the U.S. tax system_ over the past 100 vears. FREDU.S Individual Income Tax: Tax Rates for Regular Tax: Highest Bracket 100 90 80 70 60 50 a 40 30 20 10 0 1920 1940 1960 1980 2000 Source: U.S. Department of the Treasury. Internal Revenue Service a. When the income tax was first introduced, what was the rate on the highest bracket?